© Reuters. FILE PHOTO: A sign for Silicon Valley Bank (SVB) headquarters in Santa Clara, California, U.S., March 10, 2023. REUTERS/Nathan Frandino/File Photo/File Photo
(Reuters) – SVB Financial Group and two top executives were sued on Monday by shareholders who accused them of concealing how rising interest rates would leave their Silicon Valley Bank unit, which failed last week, “particularly susceptible” to a bank run.
The proposed class action lawsuit against SVB, CEO Greg Becker and CFO Daniel Beck has been filed in federal court in San Jose, California.
It appeared to be the first of many likely lawsuits over the demise of Silicon Valley Bank, which US regulators seized on March 10 following a surge in deposit withdrawals.
SVB had shocked the market two days earlier by disclosing a $1.8bn after-tax loss from investment sales and that it planned to raise capital, while rushing to meet bailout requests.
Silicon Valley Bank had an estimated $209 billion in assets and $175.4 billion in deposits before its collapse, in the biggest US bank failure since the 2008 financial crisis.
Its collapse has sparked fears of contagion among other lenders that also serve wealthy clients, including tech startups and venture capital-backed companies, as well as big regional banks.
In Monday’s lawsuit, shareholders led by Chandra Vanipenta said Santa Clara, California-based SVB failed to disclose how raising interest rates would undermine its business model and leave it worse off than banks with different bases. Of customers.
The lawsuit seeks unspecified damages for SVB investors between June 16, 2021 and March 10, 2023.
SVB said on Monday it will explore strategic alternatives for what remains of the company, now divested of its core banking business.
The case is Vanipenta v SVB Financial Group et al, US District Court, Northern District of California, No. 23-01097.
